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Deposits and Investments Continue Growth in 1st Quarter - Still Searching for Loans

Credit union share growth continued to outpace loan growth in the
first quarter of 2003. Credit unions grew share dollars 5.5% in
the first three months compared with a relatively sluggish 0.6%
increase in loans in the same period. As individuals paid down some
of their holiday debt, total unsecured loan balances declined 5%.
That there was positive growth in loans at all is due to first mortgage
loans.

Credit union share growth continued to outpace loan growth in the
first quarter of 2003. Credit unions grew share dollars 5.5% in
the first three months compared with a relatively sluggish 0.6%
increase in loans in the same period. As individuals paid down some
of their holiday debt, total unsecured loan balances declined 5%.
That there was positive growth in loans at all is due to first mortgage
loans.

Key 1st quarter performance
measures:

#
of Credit Unions:

9,810

Assets:

$598.2
billion

Membership:

83
million

ROA:

1.04%

Net
Worth/Assets:

10.45%

Op
Exp/Avg Assets:

3.17%

Net
Interest Margin:

3.42%

Delinquency:

0.74%

The $3.8 billion increase in first mortgage loans outstanding is
nearly double the increase of the loan portfolio as a whole. And
this increase came, despite the credit union industry selling over
$9 billion of mortgages on the secondary market, a 72% increase
over the first three months of 2002, which was a record year for
mortgage sales.

This discrepancy in balance sheet growth rates dropped the loan
to share ratio more than 3 percentage points to 67.4%. This also
left $27.9 billion available for investments, a 14.5% growth in
investments in just three months. As the graph below demonstrates,
$17.5 billion of those new investment dollars went very short as
cash on deposit.